- Pound sterling vs euro rate down 0.68% so far in Friday’s session.
- Pound falls after UK PMI confirms record low output in April.
- EUR vs USD up 1.4% since Tuesday.
The pound sterling vs euro rate is currently down 0.68% through Friday’s trading session. The UK’s April PMI figures plunged to record lows causing the sharp fall in GBP vs EUR.
Current EUR to GBP rate: 0.8988 GBP
Current GBP to EUR rate: 1.1126 EUR
Current EUR to USD rate: 1.1958 USD
This came after the pound had been bolstered on Thursday, following the announcement from Prime Minister Boris Johnson that the UK was past its peak of the pandemic and will next week, through working with trade union representatives, set out a comprehensive plan for reopening the economy. GBP was up against most major currencies on Thursday. The GBP vs SGD rate closed Thursday’s session up 0.92%. The GBP vs USD rate closed Thursday’s session up 0.89% and is currently tracking down 0.22% at the time of writing on Friday. ING’s FX scorecard, developed to determine the future prospects of the 10 most traded currencies in the world, had both GBP and EUR in the middle of the pack.
UK PMI Slumps to Record Lows
Manufacturing collapsed in April as the British economy froze during the grip of the coronavirus lockdown. April’s UK PMI figure fell to 32.6 – anything below 50 is an indication the manufacturing industry is shrinking.
March’s PMI figure also came in below 50 when it recorded at 47.8 – it too was impacted by the lock down but only during its final week. The fall to 32.6 in April marks one of the steepest since the IHS Markit/CIPS surveys were first carried out 28 years ago. It also marks a record low for the index, reading lower than the score of 34.5 recorded in February 2009 during the financial crisis. In 10 of the past 12 months UK manufacturing output has been down.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), commented: “There is no comparable time in history to make predictions against, but, as production ramps up again in the Far East, the sector remained optimistic that, in a year’s time, the operating environment will resemble some new normality.”
EUR Begins Recovery Following Earlier Shocks
The euro also started to recover as the market digested the EU economy’s near 4% contraction in Q1 and the announcement from ECB President Christine Lagarde saying EU GDP could slump by 15% in a “severe” Q2 scenario. GBP/EUR briefly pipped the 1.15 mark yesterday but has now fallen back to low 1.14’s.
At the ECB policy meeting on Thursday it was determined there would be no changes to interest rates – holding the current 0% but there were changes made to the longer-term financing operations with the cost for TLTRO operations now set at 50 basis points below the average refinance rate. According to the ECB’s statement, interest rates are expected to remain at current levels or lower until there is sustained progress towards the inflation target.
USD has continued to struggle as the euro vs US dollar rate made gains througout the later part of the week. EUR vs USD is now trading at 1.0977, up 1.4% from its close of 1.0825 on Tuesday.
The eurozone is set to announce its own PMI figures next week, a sharp fall in output – particularly in Germany – could see EUR gains retreat.
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